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Prospects for Trade With Syria

It was hard to assume that private businesses in Iran would one day deliberate on pumping money into the Syrian market, a market of roughly 23 million people that is all but cut off from the global trade because of international sanctions and the bloody war that has engulfed the country for the past five years.

However, the Iranians, banking on political amity, have already started to look for possible business opportunities in this untapped market.

Iran and Syria have had a strategic alliance ever since the Iraq–Iran War (1980-1988), when Syria sided with Iran against the Iraqi aggression. Trade between the two countries took a new turn in the wake of militancy in Syria. In a show of support for Damascus in its battle against the insurgents, the Iranian government agreed in 2013 to open a new line of credit for the Syrian government enabling it to meet shortages of food and energy and provide assistance for reconstruction.

Although bilateral political ties were initially thought to give an edge to mutual commerce, annual trade between the two countries is still trivial, amounting to slightly over $800 million. Iranian businesses believe that trade with Syria has been slow because there are certain deficiencies on both sides that have kept the traders at bay. The Persian daily, Forsat-e Emrooz, interviewed Iranian experts and economists on the current status of Iran’s trade with Syria and the measures that need to be taken to increase bilateral trade.

Mohammad Taghizadeh, representative of Shirin Asal Food Industries Group in Syria, says “lack of transportation” is the biggest problem hampering trade between the two countries, arguing that launching of direct shipping line from Iran’s Bandar Abbas to Syria is a necessity as it can help the Iranian private sector to have an easy access to the Syrian market.

He added that the absence of foreign competition, especially from Turkey, provides for a great opportunity to tap into the Syrian market and turn Syria into “a second Iraq” for the Iranian exporters.

“The two countries have already reached a preferential tariff agreement, and the government of Syria has recently cut out the custom duties on imports, which gives Iranians an edge on doing trade with Syria. On the other hand, the Turks are missing such benefits. This can turn Syria into a major export destination in the long-run,” he said.

Meanwhile, an expert with Tose’e Payandeh Company believes that the expansion of trade with Syria needs to be supplemented with proper infrastructure, noting that the Syrian economy is in shambles because of the myriad internal problems the country is grappling with.

“In Syria, there are different groups involved in decision making. Last year, we exported a container of tomato paste to Syria but it took almost nine months to be cleared from Syrian customs. The reason was that the Syrian economy minister was against imports even though the country was facing severe food scarcity as a result of war.”

He added that the pending decision to launch a shipping line from Iran to the Syrian cities of Latakia and Tartus – both under the control of the Damascus government – will significantly boost trade between the two countries.

Senior advisor for Syrian affairs at Iran’s chamber of commerce, Jahanbaksh Sanjabi, says that bilateral trade has been hampered because the regulations spelled out by the Iranian authorities are by no means in favor of exporters.

“First, there is still no clear strategy for exports. Although at the decision making level we wish to spur exports, the regulations tell a completely different story. Secondly, Iran’s economy is steered by administrative fiat and avoids risks. Thirdly, we are always driven by slogans ignoring the realties on the ground,” he said.

Trade relations between Syria and Iran are governed by an agreement that was signed in March 1996 but went into effect in April 2004.